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America's Foreclosure Epidemic

Government Debuts New Refinancing, Modification Initiatives
3/21/2009 from www.SourceOfTitle.com

Earlier this month Fannie Mae began making two new initiatives - Home Affordable Refinance and Home Affordable Modification - available to its servicers and borrowers as part of the Obama administration's Making Home Affordable program. The two initiatives are designed to significantly expand the numbers of borrowers who can refinance or modify their mortgages to a payment that is affordable now and into the future.

"Making Home Affordable provides crucial tools to mortgage lenders and homeowners coping with financial hardship and declining home prices," said Herb Allison, Fannie Mae's president and chief-executive-officer. "Potentially millions of homeowners could qualify for and benefit from these initiatives. The people of Fannie Mae will do all they can to make the program a success for homeowners across America and to advance the nation's housing recovery."

The Home Affordable Refinance program includes new refinancing flexibilities for homeowners whose loans are owned by Fannie Mae. Several of the key features of this program include extending additional flexibilities that do not force borrowers to buy new or additional mortgage insurance if the loan at the time of the refinance is more than 80 percent of a home's value; and, streamlined processing that begins in April. Under the guidelines, all 1,600 lenders and 29,000 mortgage brokers that use Fannie Mae's Desktop Underwriter platform will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity and easier refinancing for borrowers.

Through the Home Affordable Modification, Fannie Mae will work with loan servicers across the country to help distressed borrowers modify their current loan into a mortgage that is more affordable and sustainable. Loan servicers participating in the program may reduce interest rates, lengthen the payment time frame or take other steps, such as principal forbearance, to bring the monthly payments down to as low as 31 percent of the borrower's gross pre-tax income.

To ensure borrowers currently at risk of a foreclosure have the opportunity to apply for a Home Affordable Modification, Fannie Mae servicers have been directed not to proceed with a foreclosure until a borrower has been evaluated for the program.

 

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